SIP or pension salary sacrifice?
Both can reduce payroll tax and NI, but they buy different things. SIP buys employer shares. Pension salary sacrifice funds retirement savings. The after-tax cash cost alone cannot tell you which is suitable.
Updated 22 September 2026. Examples and linked calculators cover England, Wales and Northern Ireland.
| Question | SIP partnership shares | Pension salary sacrifice |
|---|---|---|
| What receives the money? | Shares in your employer | Your workplace pension |
| Employer additions? | Scheme-specific matching shares | Scheme-specific pension contributions |
| Access? | Early removal can change tax treatment and matching entitlements | Subject to pension access rules |
| Risk? | Employer share-price exposure alongside your employment | Depends on pension investments and charges |
Compare like-for-like contributions
Start with your actual salary, pension and loan plan. Copy it to a second scenario. Change only the contribution you want to investigate, then compare take-home pay alongside pension allocations and shares. Employer matches must be entered from your own scheme documents.
A SIP’s full tax advantages normally depend on holding shares in the plan for five years. Partnership purchases are limited to the lower of £1,800 or 10% of income each tax year. Pension contributions have separate tax limits, and salary sacrifice requires employer agreement.
Consider access and concentration
Shares shown at purchase cost are not guaranteed future cash. Pension allocations are also separate from spendable pay. Consider when you need the money, existing investments and the consequences of leaving your employer. We do not recommend a scheme or forecast investment returns.
Compare your own scenarios → · Explore pension cash costs
Sources: HMRC SIP guidance, pension tax relief, and our calculation assumptions.